STAG — STAG Industrial, Inc.

STAG Industrial Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Core FFO per share: $0.65, up 6.6% year-over-year.
• Leverage: Net debt to annualized run rate adjusted EBITDA at 5.
• Liquidity: $806 million at quarter-end.
• Leases Commenced: 37 leases across 6 million square feet, with cash and straight-line leasing spreads of 20.9% and 39.6%, respectively.
• Same-store Cash NOI: Grew 4.1% for the quarter.
• Retention Rate: 69.5%, with guidance maintained at 70% to 80% for the year.

2. Strategic Updates and Business Highlights:

• Leasing Activity: Strong demand across various sectors, particularly in the 150,000 to 250,000 square foot range and data center-related leasing, with 8 leases totaling 1.6 million square feet signed since early 2025.
• Acquisition: Acquired a 750,000 square foot building in Platte City, Missouri for $80.7 million at a cap rate of 6.1%.
• Development Pipeline: 7 buildings totaling 1.8 million square feet in various stages of development, with an expected stabilized yield of 7.1%.
• Market Trends: Positive momentum in the industrial leasing market, with expectations for national vacancy rates to peak in the coming months.

3. Forward Guidance and Outlook:

• Cash Leasing Spreads: Expected to be between 18% to 20% for the year.
• Same-store Cash NOI Growth: Guidance maintained at 3% at the midpoint.
• Occupancy Expectations: Anticipated trough in occupancy in Q2, with recovery expected in the latter half of the year.

4. Bad News, Challenges, or Points of Concern:

• Occupancy Decline: Noted a decline in occupancy, with a 60 basis point average occupancy loss impacting Q1 results, which may reflect negatively in Q2.
• Retention Risks: Retention rate is below the guidance range, potentially impacting future occupancy.
• Market Volatility: Concerns regarding macroeconomic and geopolitical factors affecting private market valuations and cap rates.

5. Notable Q&A Insights:

• Leasing Market Health: Management acknowledged a healthier leasing market but maintained cautious optimism regarding lease-up assumptions, budgeting 9 to 12 months for vacant spaces.
• Data Center Demand: Strong demand from data center tenants, with a variety of tenants including 3PLs and equipment manufacturers. This trend is expected to continue, particularly in Southeast and Midwest markets.
• Market Rent Growth Expectations: While initial guidance was flat to 2%, management hinted at potential upward trends as market conditions improve.
• Acquisition Strategy: STAG remains open to various asset types, balancing core acquisitions with value-add opportunities, and noted a strong pipeline of $3.9 billion.

Overall, STAG Industrial reported solid financial performance in Q1 2026, driven by strong leasing activity and strategic acquisitions, while facing challenges related to occupancy and retention. The company maintains a positive outlook for the remainder of the year, despite some headwinds.